By 1906, because of the work of Lee de Forest, inventors knew the two basic functions of a vacuum tube -- converting alternating current to direct current and amplifying an electronic signal. Over the decades, vacuum tubes were improved and were used in more and more complicated circuitry. At the 1939 World's Fair, for example, vacuum tubes were showcased in fully electronic television. And by 1945, the high-speed computer ENIAC was built, containing more than 17,000 tubes. Although successful, ENIAC and its offspring showed the real limitations of vacuum tubes: to make more powerful computers, more tubes would be needed, but at some point available space and energy would prevent further growth. Vacuum tubes were bulky, used a lot of energy, and were somewhat fragile and easy to overheat. Engineers knew they needed to find something different.

The telephone company had problems with vacuum tubes, too, and hoped to find something else to use for switching telephone calls. The idea of somehow using semiconductors (solid materials such as silicon that conduct electricity, but not as well as a conductor such as copper) had been tossed about before World War II, but knowledge about how they worked was scant, and manufacturing semiconductors was difficult. In 1945, however, the vice president for research at Bell Labs established a research group to look into it. The group was led by William Shockley and included Walter Brattain, John Bardeen, and others, physicists who had worked with quantum theory, especially in solids.

The team was talented and worked well together. After two years of frustrating but very exciting work, Bardeen and Brattain created an amplifying circuit that seemed to work, using the element germanium They called it the point-contact transistor. Its discovery was announced at a news conference, but received for the most part as a smart gizmo the phone company had developed. But in 1951, Shockley improved upon the original idea with a junction transistor. The importance of this small item gradually sank in. The transistor was a solid (thus the term "solid-state technology") but had the electrical properties of a vacuum tube. Yet it had none of the drawbacks: it was cheap, sturdy, used little power, worked instantly, and best of all, was tiny. Bell began to license the use of transistors (for a royalty) and offered courses on transistor technology, helping spread the word throughout the industry.

The first transistor available to consumers was in hearing aids, followed quickly by transistor radios. The computer industry immediately began designing computers using transistors that were faster, smaller, more economical, and more powerful.